The Monday note - 13 May 2019

• The FTSE 100 dropped 177 points in the short week following the May bank holiday to close at 7,203.3 on Friday, as the US/China trade war intensified. The ten year Gilt yield stood at 1.14%. 
• The US increased tariffs on certain Chinese imports from 10% to 25%, after the two countries failed to reach a negotiated settlement. 
• Tensions are rising in the Persian gulf, where Saudi Arabia this morning said two of its oil tankers have experienced a “sabotage attack”. 
• UK GDP grew by 0.5% in Q1 2019, in part boosted by Brexit preparations such as stockpiling. The retail and IT industries also reported strong figures. 

Chief Economist comments: 

In May we have seen geo-political risks suddenly resurface, and grab the headlines. Indeed, the surprisingly good UK GDP figures have largely been written up as background for discussing the Brexit politics. However, growth was not just driven by stockpiling. The GDP figures show the digital revolution continues to drive growth, and business investment rebounded in Q1. There is plenty of evidence that firms are tuning out the politics, and getting on with trading.